Honda Cars India wants to become Starbucks of Indian car market: Yoichiro Ueno

The newly appointed CEO and President of Honda Cars India, Yoichiro Ueno is carving out a new strategy to create a niche for the company's productsNabeel A Khan | ETAuto | March 16, 2017, 16:30 IST

Honda Cars India which had a good brand image since the launch of its executive sedan City, has off late seen a dent in its popularity amongst customers. Aware of this fact, the newly appointed CEO and President of Honda Cars India, Yoichiro Ueno is carving out a new strategy to create a niche for the company's products.

Yoichiro Ueno says that Honda will do away with entry- level variants across its models and will address the premium curve across the product portfolio. He explains that the company’s priority is not to completely shift to the volume oriented segment and rather focus on brand establishment.

Do you think getting into segments having products like Amaze was a mistake for Honda?

No, it was not a mistake; maybe we shifted priority to small cars too much. Now, we are trying to balance it with traditional premium segments for which Honda is known for.

Are you exploring alternate fuel cars in India?

Fuel cell is a long term strategy. If we launch the hybrid now in India we won’t succeed, because customers are not ready to pay the cost. The hybrid is Rs 1.5 lakh – Rs 2 lakh more expensive than regular vehicles.

What is your target for India, in terms of numbers?

Achieving over 10 percent market share is very important in the middle term, that is around 3-4 years.

How is HCIL going to gain the premium brand image of Honda City?

We have to do a lot of things. Premiumness is a combination of product and customer experience. Product we cannot touch as it has already been fixed. Our products need to have more features to enforce specifications and customer experiences. We have some variants which have low content to achieve low pricing; may be those variants are not always successful for Honda because of customer expectations. But now, for example, even the first variant in the City has a lot more content than ever. We are now trying to reduce the number of entry level variants.

What about Mobilio and BR-V? Are we expecting a new Mobilio?

Their price ranges are different so customers for them are also different. However, BR-V is covering a large range of Mobilio customers. At this moment importance of Mobilio is a bit down. There are changes are expected in the Mobilio to meet new regulations and this is a big investment. So we are studying these big investments and also about new variants.

Also we have minor model change versions coming in other countries. So, we are also looking for such variants for the Indian market. Currently there is no stock of Mobilio. We have some global models which are not sold in India. The request and enquiries which we are getting from our customers is for HR-V.

You had a domestic sales target of 3 lakh units in 2017. When do you expect to achieve that?

We have lowered that to 2 lakh plus units for coming few years.

What are the branding tools that you are planning to use for brand creation, and what about your investments for marketing?

From the hardware side, we are developing new customised intelligence system. Currently, customers before visiting dealers learn a lot from the Internet and magazines; so these days’ customers are knowledgeable. So, we are focusing on quality of sales. Not only for Honda, but overall also we are reducing attrition among sales consultants.

Also we are developing management tools for connecting customers,for example, digitisation in the dealer infrastructure. We don’t have any specific plan, but yes it can be one of the things. We want to change the taste of marketing activities. Earlier, customers in India were product oriented, for example the foremost reason to buy a vehicle is its exterior design. People want to see direct benefit from it and perceive it as a commodity. However, now experience has become more important. So we are reviewing our activities; we want to create real customer oriented services. But yes, it does not happen quickly.

India is the base for Honda’s components export for global consumption. How do you see that side of business in the coming few years?

Years ago India’s cost was not so different from Thailand. However, suppliers’ quality and cost dramatically improved in the last few years. So India’s components are competitive now. We are seeing a lot of opportunities in the future. We also want to increase our CBU exports; however Honda has a policy to make products near markets. Currently, we are exporting to Africa, but thinking about other countries also.

Where do you expect India to feature in Honda’s global market scenario?

Two years ago India was at 4th position. This fiscal year Indonesia overtook India. It’s in top five lists now and contributes 5% of Honda’s global sales. We expect India to grow much faster than global sales. This increase will not happen in the short term; we are expecting real motorisation somewhere around 2025-2030. Once India’s GDP per capita crosses 5 percent, big motorisation may happen.

The income level per person has to increase Rs 4000 – Rs 5000. One challenge in India is we see very limited choice of cars because of regulations. If market grows, people will want more variety of cars to purchase. So, I think it is a good opportunity to review the policy.

Are you ready for upcoming policies like safety norms, BS-VI emission norms?

We are ready; however the cost increase is quite large for BS-VI as it requires a lot of additions.

UVs are the fastest growing segment in India where you have products like BR-V, Mobilio and CR-V. What went wrong with Honda in not able to hit this part of the market?

Mobilio was working good in Indonesia. Indian customers like to move in private cars when it comes to six-seven people; lifestyle of India is a bit different from Indonesia. Small compact MPVs can have a big market but customers here prefer more private cars; not many people want to commute in one MPV. BR-V is doing okay. However, our initial marketing activities were focused on SUVs, We emphasised the SUV taste as we already had Mobilio. I think we need to communicate a bit more.

Cost versus volume …what is going to be Honda’s priority now ?

Our previous focus was how to achieve same price with other competitors. Now we have shifted to achieving premiumness by reducing cost. Of course unnecessary costs can be cut by improving efficiency. In terms of features and specifications, reducing cost to achieve lower price is not right for Honda. It’s not about bringing premium products, it’s more about bringing something a bit different from other competitors. Let’s say Starbucks. It’s not extremely costly but slightly expensive and offers different coffee and ambience. If we talk in terms of hotel industry, we want to position ourselves in 4.5 star hotels, if 5 stars are real luxury brand.

How do you look at the Indian automobile market and where will Honda will play its role?

Indian market is different from others in terms of size of cars; there is too much for small cars. Here, the brand image is a bit different. However if customers here become more globalised, India will be going closer to other markets and then there will be opportunity for companies which have large cars like Honda and Toyota. Companies like this have good global image, but in India they are under-utilised. However, this will take time around 5-10 years.

We have seen a lot of crossovers coming into the Indian market. How do you think this product is going to be different in India as there has been very little growth in this segment?

We don’t see much difference in crossovers and SUVs; it’s a matter of a unique viewpoint.May be, it’s up to the customers to decide. WR-V is a product somewhere between MPV and SUV with sporty exterior looks, and high ground clearance. We are expecting good number of sales from this product.

Going forward, what’s going to be the target for Honda in India to leverage its capacity?

Our priority is not to completely shift to volume oriented target; we are rather focusing on brand establishment